Economics/Basic accesibility of a product
Hello, I have a very simple question. There has been a collectible toy on the market for about 10 years, with only originals in circulation. The price was stagnant for quite a while. Recently, the toy manufacturer re-released the product in a small limited run. Since then, the demand for the product has gone up, and so has the price. I have no physical evidence, but a general consensus is that more people want this item now than before, and it seems that demand keeps rising as the item gains in popularity even after the second limited run has long been over. Would it be safe to assume that the accessibility of this item has decreased even though there is are physically more of the item in circulation?
Although you have not clearly mentioned what particular type of toy you are seeking the answer about, I take it that it is just a simple, non-mechanical, non-contraption toy made of simple yet genuine materials which is so designed as to attract choosy customers who place emotional value to mementos or souvenirs. This I assume on the basis of the tenor of your arguments regarding the simultaneous shift in demand and the rise in price. If you have any other view about the type of product, then the hypothesis you have set out may not turn out tenable. Write to me if you think otherwise.
WHAT ECONOMIC TYPE OF GOOD THIS TOY IS
First, this is not an ordinary, normal good. For a normal good will not register any increase in demand owing to a rise in price. The demand curve is downward sloping, delineating a movement along the demand curve from the northwest to southeast, riding on an inverse relationship between price and quantity demanded.
Second, this is not a necessity item, in which case the demand curve is like that of the normal good or in extreme case a vertical line in the positive quadrant of price-quantity plane.
Third, this is not a Giffen good, in which case when price falls, demand also falls, giving the demand curve a positive slope.
Finally, we are left with one type of good that has also a positively sloped demand curve like that of the Giffen good. The difference is, here price is going up and the demand for the product is also going up. This, I would consider, comes under the purview of Veblen good.
Veblen good is that type of good the quantity demanded for which goes up when price increases. It so happens that if the price is much too low in consumers' perception, the demand for the product pesters at a very low level. American economist Veblen found out that, bitten by the bug of snob-appeal, a small section of people with predilection for showoff or certain unaccountable idiosyncrasy has a tendency to shy away from a product which, by virtue of the outward tag of price, does not appeal to them as of status value they crave to maintain. This is also finely alluded to by J. K. Galbraith in his best-selling magnum opus "Affluent Society."
HOW DOES VEBLEN GOOD WORK?
Gucci would have lived and died poor as an ordinary janitor in a foreign country had it not occurred to him that the fashionable vanity bags high-society ladies were carrying were nothing but made of ordinary leather but with the mark of high society. He hit on the idea, brought leather bags, and started selling at high prices. The same way customers were attracted to by clothes at higher prices from Pierre Cardin while frowning upon similar clothes meant for poorer sections and sold at lower prices.
The point is, when two more or less identical products with different price tags are placed to a particular type of customer who believes in exclusiveness yet cannot exactly differentiate the putative qualitative differences, may easily be tempted to go in for the product with a higher price tag. Needless to mention, most customers may choose the product with lower price tag.
MEMENTO OR KEEPSAKE OR SOUVENIR
These are the products people buy more because of attachment to emotional values than because of usefulness. They try to attach values to the products. Should that be perceived to have very low price, the buyer may flinch from purchasing the product. So the product, though not exactly a product emanating from snob-appeal, has more or less identical "evocative response."
COLLECTIBLE TOY: BEHAVIOR PATTERNS IN DEMAND
Collectible toy, having the characteristics expounded above, may lie in the low plateau of demand if the price attached to it fails to evoke response from customers who, for obvious reasons of their being unable to dichotomize values between high value and low value of two identical products, take price as the determinant of quality.
This is exactly what happened. The collectible toy was gathering dust on shelves of retail stores as the low price did not sufficiently attract the relevant customers. Then, as if by a magic of microeconomics, the sellers discovered the raison d'괲e behind the "shift" in supply. The parameter of "collectible property" embedded into the demand function triggered a shift in tandem in the demand schedule, which indeed was upward-sloping due to features explained above.
The upshot of that was that both the supply curve and the demand curve became upward-sloping. The supply curve that shifted upward and to the left intersected the demand curve at a point where the coordinate showed "high price, high demand" when in fact supply is "constricted."
This is shown in the attachment. Poring over this diagram will give you more insight than reading reams of paper, I believe with Samuelson.
CONCLUSION: CONSTRICTED ACCESSIBILITY EMBODIED IN NORTHWESTWARD SHIFT IN SUPPLY
For further reference, if you are comfortable with advanced mathematics, look up "Comparative Statics and the Stability of Equilibrium (The Cobweb Model)" in "Microeconomics" by R. Robert Russell and Maurice Wilkinson. They give a beautiful presentation with upward-sloping supply curve and upward-sloping demand curve: geometry is simple, but it presupposes knowledge difference and differential equations. If you are at this stage of your academic studies not that much comfortable with math, don't worry much. You won't lose much --I have reproduced an adapted version of their model in an easily understandable attachment.
I hope, Joshua, I carry my explanation across to you as clearly as possible. Best.